- GBP/USD is eying more upside above 1.1517 as the market mood has turned cheerful.
- The DXY has refreshed the day’s low at 111.28 despite soaring hawkish Fed bets.
- A collective effort of tight monetary policy and fiscal will weigh on price growth in the UK.
The GBP/USD pair is aiming to extend its recovery above the immediate hurdle of 1.1517 after a sheer rebound from 1.1460 in the early European session. The cable has been underpinned as the risk-on impulse has rebounded firmly. As uncertainty ahead of Federal Reserve (Fed) policy is fading away, investors are parking their funds in risk-sensitive assets.
S&P500 futures have recovered majorly after a bearish Monday. The 10-year US Treasury yields have dropped to 4.02%. Meanwhile, the US dollar index (DXY) is looking to extend its losses below the intraday low at 111.28.
Pound bulls are gearing up as odds of a 75 basis point (bps) rate hike by the Bank of England (BOE) has escalated. In order to tame the double-digit figure inflation, BOE Governor Andrew Bailey has no other option than to tighten policy with a bigger rate hike. The extent of the 75 bps rate will be the largest in the current rate escalating cycle.
UK’s novel leadership is putting blood and sweat to curb the debt crisis. In an article written by Financial Times on Monday, Treasury insiders said that UK PM Rishi Sunak and Chancellor Jeremy Hunt had agreed that “those with the broadest shoulders should be asked to bear the greatest burden”, and everybody’s taxes would go up.
They further added that the administration believes that the fiscal hole in the economy led by helicopter money injected into the economy to fight against Covid-19 and to support households against energy bills is needed to be filled. And, spending cuts seldom cannot fulfill the fiscal hole.
On the US front, the Fed is expected to continue its 75 bps rate hike spell for the fourth time and will push rates to 3.75-4%, a step further in achieving the agenda of price stability. On Tuesday, investors’ focus will remain on ISM Manufacturing PMI data, which is seen lower at 50.0 vs. the prior release of 50.9.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD keeps the offered bias near 1.1360
EUR/USD remains under pressure in the mid-1.1300s following the press conference by the ECB’s Lagarde on Thursday, all after the central bank matched estimates and unanimously lowered its policy rates at its event.
GBP/USD advances to daily highs past 1.3250
GBP/USD is picking up extra upside impulse and is revisiting the 1.3250 zone, or daily peaks, as the US Dollar is trimming part of its earlier advance. The move in Cable remains propped up by a firm tone in the risk complex.
Gold loses traction and revisits the $3,320 zone
Gold burst to another all‑time high, teasing the $3,360 mark per ounce before easing back to the $3,320 zone per troy ounce as the Greeback staged a comeback and Treasury yields firmed across the curve.
Crypto market cap fell more than 18% in Q1, wiping out $633.5 billion after Trump’s inauguration top
CoinGecko’s Q1 Crypto Industry Report highlights that the total crypto market capitalization fell by 18.6% in the first quarter, wiping out $633.5 billion after topping on January 18, just a couple of days ahead of US President Donald Trump’s inauguration.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.